US manufacturing activity rises in October amid high input prices
The manufacturing Purchasing Managers' Index increased to 55.5 in October, driven by strong domestic demand and business spending on artificial intelligence.
US manufacturing activity improved in October due to strong domestic demand, according to a report by the Economic Times citing the Institute for Supply Management (ISM). The manufacturing Purchasing Managers' Index (PMI) rose to 55.5 from 54.5 in September, exceeding the 54.5 forecast by economists polled by Reuters.
A measure of factory production increased 2.3 percentage points to 59, marking its highest level since November 2021. Twelve industries reported growth, including transportation equipment, machinery, and electrical equipment, while three industries reported a contraction.
Despite the growth, Susan Spence, chair of the ISM Manufacturing Business Survey Committee, said general sentiment worsened for the third consecutive month. She noted that 66 per cent of respondent commentary was negative, with pricing volatility, tariffs, and war cited as primary concerns.
The gauge for prices paid for inputs eased to 75.2 from 77.9 in September, but remained high. Prices continued to rise for products such as copper, aluminum, diesel fuel, and electronic components.
Priscilla Thiagamoorthy, a senior economist at BMO Capital Markets, said that ongoing issues with supply and high costs for inputs indicate that inflation is not yet under control. The US central bank recently kept its benchmark interest rate within the 3.75%-4.00% range.
